Only 38 Percent of Microbusiness Owners Received Government Aid During the Pandemic, with 50 Percent Still Experiencing Negative Impacts of COVID-19
Yahoo Small Business, a division of Verizon Business, released the findings of the Yahoo Small Business 2021 Microbusiness Outlook Report, a new survey exploring the state of microbusinesses (businesses with five or fewer employees) in the U.S. and their outlook as they emerge from the COVID-19 pandemic. A highlight of the findings are as follows:
- 50% of microbusiness owners continue to struggle with the economic impacts of COVID.
- 38% have received or expect to receive government support, but 61% expect that support to fall short of fully addressing their financial needs.
- 85% of the surveyed businesses say community support was crucial to keeping them afloat. The survey's findings underscored the critical role that community support played for microbusinesses during the pandemic. Among those microbusiness owners still feeling the impact of COVID-19, two thirds (66%) have considered closing.
- 95% of microbusiness owners are optimistic about 2021.
- 52% are planning to expand their business this year.
- Nearly 3 in 4 microbusiness owners (73%) say technology will be critical to growing and scaling their business as they continue on the road to recovery this year, demonstrating that critical to growth and success for small businesses is an investment in new approaches to technology.
"Around 60% of all businesses in the U.S. have 5 or fewer employees. The positive outlook of these microbusiness owners for 2021 proves the resiliency of these entrepreneurs that represent a driving force in our economy," said Kushagra Shrivastava, managing director, Verizon. "At Yahoo Small Business, we're proud to partner with these business owners as they navigate the evolving business and consumer landscape as we emerge from the pandemic and enter into the next normal. We felt privileged to provide support during the pandemic, and are excited to walk alongside them as they navigate the next step of their entrepreneurial journeys."
Technology integration was—and remains—a key dependency for success and growth
COVID-19 accelerated businesses' digital transformation, and microbusinesses were no exception.
- 37% of microbusiness owners are making changes to the way they do business online, showing that technology was a key factor in helping microbusiness owners succeed amid the unprecedented challenges created by the pandemic.
- More than one in three (36%) invested in software platforms to optimize their business during the pandemic, and another 29% plan to do so before the end of the year (among those using software platforms for business support).
Marketing and ecommerce are growing in importance
- 70% of microbusiness owners surveyed reported having to make changes to their business in order to survive the pandemic. Now, after weathering the COVID-19 storm, many are continuing to make changes to meet new customer priorities, with the same amount (70%) also planning to update their business operations to meet customer needs post-pandemic.
- 47% say it will be critical to prioritize increasing marketing efforts for 2021 to promote their business.
- 74% of microbusiness owners also plan to prioritize ecommerce tech over the next one to two years. Ecommerce is especially critical for microbusiness owners still struggling with the pandemic.
- 81% plan to prioritize ecommerce tech in the next one to two years, compared to 68 percent of their peers who report they are no longer affected by the pandemic.
Sole proprietors weathered the storm alone
For sole proprietors (microbusiness owners with no employees), the pandemic has been particularly difficult.
- Just 1 in 4 sole proprietors (25%) received or expects to receive pandemic-related government support, significantly less than the 42% of their peers with employees.
- 63% of the sole proprietors surveyed report that they did not receive any community support to keep their business operating during the pandemic, highlighting the challenges that sole proprietors face in going it alone.
- 66% of sole proprietors said they do not plan to expand in the coming year, compared to just 43% of their peers with employees.
- But 46% of sole proprietors reported that their business was unaffected by COVID-19 and just 30% say they had considered closing their business as a result of the pandemic.
BIPOC microbusiness owners look to the future
In comparison to the rest of their peers, BIPOC microbusiness owners are particularly focused on future growth.
- 62% of BIPOC microbusiness owners are planning to expand their businesses this year, significantly more than their non-BIPOC peers (50%).
- 78% of BIPOC microbusiness owners also report planning to update their business operations to meet changing customer needs post COVID-19 (compared to 68% of their non-BIPOC peers).
- 86% say that technology will be critical for growing and scaling their business (compared to 70% of their non-BIPOC peers).
- This sentiment parallels what's happening in much larger businesses, with a recent Verizon Business 5G Enterprise Report showing that 63% of small business decision makers felt that businesses that do not adopt 5G will fall behind their peers. Additionally, nearly a third (31%) are either currently or planning to, within the next six months, provide employees an allowance or stipend to upgrade their wireless device and service to 5G.
Older microbusiness owners risk falling behind
The future of business will be driven by tech, and older microbusiness owners risk falling behind their younger peers if they do not put the work in to modernizing their businesses.
- 73% of microbusiness owners aged over 40 plan to prioritize tech in the coming years, compared to 84% of those under 40.
- 76% of microbusiness owners under 40 have invested or plan to invest in new platforms to optimize their business compared to just 54% of their peers over 40 who say the same.
- 43% of older entrepreneurs (compared to 52% of younger microbusiness owners) are behind when it comes to increasing their presence on social media or using tech to drive new products or service updates (17%, compared to 31% of their younger peers).
- This widening gap could make it more difficult for older entrepreneurs to keep up as they emerge from the pandemic.
- 60% of microbusiness owners under 40 are planning to expand as they emerge from the pandemic, vs 39% for those 40 and older.
- 56% of microbusiness owners under 40 considered closing during the pandemic, just 38% of those over 40 did the same, highlighting the resiliency of older owners.
Verizon Business has been committed to small business recovery since the onset of COVID-19. As part of this commitment, Verizon Business offers a suite of products specifically designed with small businesses in mind, such as Yahoo Localworks which updates and corrects a business's information on directory sites consumers use when looking for products and services and Complete Business Bundle, a flexible connectivity package that includes internet, voice connectivity, router, desk phone, and internet security. Small Businesses can take advantage of Verizon Small Business Days, where they can access special discounts and receive a free tech evaluation, every Friday until July 30th.
Verizon has provided millions in financial assistance to small businesses. Verizon has paid it forward with a $10M donation to the non-profit LISC this year to provide small business grants of up to $10,000. These grants helped provide the immediate financial support the small businesses owners needed to keep them open through the pandemic, focusing on business owners in historically underserved communities. Our support for small businesses has been on-going and is tied to a multi-year commitment to support 1 million small businesses with resources to thrive in the digital economy by 2030. This is part of Citizen Verizon, our plan for social, economic and environmental advancement.
The findings of the Yahoo Small Business 2021 Microbusiness Outlook Report are based on a survey fielded in May 2021, which yielded responses from 1,000 business owners with 5 or fewer employees in the United States.